Julie Jason's Your Money: From CFP to WMS, an examination of financial designations

By JULIE JASON October 20. 2017 9:54PM


The Financial Industry Regulatory Authority, or FINRA, issued an investor alert this month on financial advisers. FINRA is the largest independent regulator for all securities firms doing business in the United States.

The issue at hand is "financial designations." If you look at your financial adviser's business card, you might see some letters after his name, such as CFWE (Certified Financial Wellness Educator) or CFP (Certified Financial Planner) - or in my case, JD (Juris Doctor) and LLM (Master of Laws), which reflect education rather than a designation.

While FINRA does not approve or endorse any professional designation, it does provide a database of over 170 designations on its website. Working through the alphabet, they range from AAI (Accredited Adviser in Insurance) to WMS (Wealth Management Specialist).

The designations sound impressive. Should they be? Here is some context:

First, all consumers should know that designations (and titles) are not licenses that give individuals the legal authority to act as financial advisers.

"The ability to provide financial advice and conduct sales activities in the securities and insurance industries requires registration with a regulatory body," quoting from the alert. "For example, brokers must be registered with FINRA, a state securities regulator or both. The Securities and Exchange Commission regulates investment advisers who manage $100 million or more in client assets, while state securities regulators have jurisdiction over advisers who manage up to $100 million. You can check out whether a broker or adviser is registered by going to FINRA BrokerCheck."

Second, "all financial designations are not created equal," quoting the alert. "Some involve fairly rigorous standards to earn and maintain the designation, allow investors to verify the status of anyone claiming to hold that designation and a few even have a formal disciplinary process. Others are relatively easy to earn and might be maintained by simply paying a yearly fee."

Third, as the alert points out, "designations can be faked." FINRA has a rule (Rule of Conduct 2210) prohibiting financial advisers from "referencing nonexistent or self-conferred degrees or credentials or referencing legitimate degrees or credentials in a misleadilwng manner."

Fourth, some state regulators do not allow financial professionals to use a designation unless it's accredited by the American National Standards Institute or the National Commission for Certifying Agencies. For more information, go to https://tinyurl.com/ycpldwzm.

Fifth, titles are also important to understand. As the alert notes, "Financial Analyst, Financial Adviser (Advisor), Financial Consultant, Financial Planner, Investment Consultant or Wealth Manager are generic terms or job titles."

For the lawyers: Another term, "Investment Counsel," is statutory, and for that reason is distinct. The Investment Advisers Act of 1940 prohibits the use of that term unless the adviser primarily provides investment supervisory services (that means that registered representatives of dually registered firms, such as large brokerage firms, would not be able to use the term "investment counsel").

Finally, watch out if you are a senior. As the North American Securities Administrators Association points out, "Bogus senior specialists commonly target senior investors through seminars where the specialist reviews seniors' assets, including securities portfolios."

What should you conclude? As the alert states, "A professional designation should never be the sole reason you select an investment professional." A lot more is involved. What's most important? From my perspective, it's all a matter of assessing an adviser's skill - the subject of future columns. If you have questions about this topic, or have stories you can share, reach out to me. My email is readers@juliejason.com.

To read the investor alert, "3 Things to Know About Financial Designations," go to https://tinyurl.com/ydyoaozl. For a list and a description of professional designations, go to https://tinyurl.com/y9df8sgm.

You'll find NASAA's "Senior Investor Alert: Senior Specialist Designations" at https://tinyurl.com/y8lhoslo.

Julie Jason, JD, LLM, a personal money manager at Jackson, Grant of Stamford, Conn., and award-winning author, welcomes questions and comments to readers@juliejason.com.


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